UK's AIM-listed Indian renewable energy company Greenko Group plc has inked a non-binding agreement to sell its entire stake in its Mauritius-based holding firm for Indian assets to Singapore's sovereign wealth fund GIC for £162.8 million ($255 million).
GIC is an existing investor in Greenko Mauritius, which also counts cleantech fund Global Environment Emerging Markets Fund III LP among others as private investors. Last year Greenko raise $125 million from Washington-based energy and infrastructure-focused asset management firm EIG Global Energy Partners, to refinance debt worth $70 million from Standard Chartered, which was due in January 2015, and also to support the development of its renewable power projects in India.
Greenko owns a little over 68 per cent stake in Greenko Mauritius, not counting preferential shares held by private investors in the Mauritius arm.
Greenko said the disposal of stake to GIC, if completed, would result in the sale of its trading activities and assets, which comprise the development, ownership and operation of clean energy projects in India together with all associated financial liabilities including debt and associated minority interests.
The deal is contingent upon several conditions including continued involvement of its top management Mahesh Kolli and Anil Chalamalasetty as managers and investors in the business.
Greenko would share further details of the deal in the future but added it intends to distribute the proceeds from the disposal, net of certain Indian taxation, transaction fees and running costs, to its own shareholders.
Greenko's board is being advised by Investec Bank plc and Arden Partners plc in relation to the deal.
For GIC this would expand its interest in the Indian renewable energy business. It had invested $150 million or £100 million in Greenko Mauritius in 2013 to help it increase its operating capacity to 2,000 MW by 2018, double the 1,000 MW target for 2015.
GIC's investment in Greenko Mauritius came with a convertible clause for swapping it into stake in Greenko Group plc, between July 1, 2015, and June 30, 2017. If converted GIC was to pick anywhere between 19.5 per cent to 29.99 per cent in Greenko Group on a fully diluted basis.
This was one of the largest PE investment in India’s green energy sector after Morgan Stanley Infrastructure Partners’ $212 million deal with Continuum Energy and Goldman Sachs’ $200 million investment in ReNew Wind Power.
GIC, which has invested in Indian infrastructure firms like power utility player GVK Energy and the state-run power utility NTPC, has been especially stepping up its India activity in the recent past.
Over the last one year it has invested in Flipkart, Sulekha, Bandhan, sealed a deal for Mumbai IT Park owner Nirlon and struck two real estate platform deals with Vatika and Brigade Enterprises besides coming in as an anchor investor in the recently closed IPO if Syngene International.
GIC also has an active public market investment practice in India.
Meanwhile, for the six months ended June 30, 2015, Greenko's power generation increased 49 per cent to 904 GWh, compared to 606 GWh in the comparable period last year. Installed operational capacity increased to 838 MW during the period, compared to 596 MW at the end of June 2014.
The company said it remains on track to meet its operational installed capacity target of 1,000 MW this year, with all projects currently under construction being fully financed. However it said the operational performance has not reflected fully in revenue terms due to the erratic monsoon season that has affected hydro plants.
It said the company's financial results for the year ending December 31, 2015 are likely to be lower than market expectations.
The firm added that the backdrop for clean energy in India remains extremely positive and its own wind and hydro portfolios have reached profitable grid parity with conventional generation in many states of the country.